Getting a loan in Nigeria is easier than it used to be. Several fintech apps let users apply from their phones without visiting a bank branch. But the cost of borrowing can vary widely, even when two apps offer similar loan amounts.
If you are considering a digital loan, the interest rate is only one part of the decision. Repayment periods, extra charges, and late-payment penalties can all affect how much you eventually pay back.
Here are five apps that offer loans in Nigeria, with a closer look at their interest rates and borrowing terms.
Oluwajeminipe Fasheun-Motesho
/1. Carbon
Carbon gives eligible users access to personal loans, with repayment periods ranging from 61 days to 12 months. Borrowers can apply through the app without collateral or a guarantor.
Its monthly interest rates range from 4.5% to 30%, depending on the offer, and its maximum annual percentage rate (APR) is 195%.
To put that into perspective, Carbon's example for a ₦1 million loan over 12 months uses a monthly interest rate of 4.5%. The total repayment comes to ₦1.54 million, meaning the borrower pays ₦540,000 above the original loan amount.
Your actual rate will depend on the offer you qualify for, so check the total repayment amount before accepting a loan.
/2. FairMoney
For borrowers who want digital lending and other financial services in one app, FairMoney offers loans alongside payments and account services.
One thing to watch is how it calculates interest. FairMoney's loan terms state that interest can reach 1% per day. This is not directly comparable with a monthly interest rate, and the actual rate depends on the offer available to each borrower.
Daily interest can make a loan expensive if it remains unpaid for an extended period. Before accepting an offer, check the total repayment amount, the due date, and any applicable fees. FairMoney's terms also include penalties for overdue repayments.
/3. Palmcredit
A ₦100,000 loan from Palmcredit could attract ₦18,000 in interest over six months under one of the app's examples. That calculation uses a monthly interest rate of 3%, bringing the total repayment to ₦118,000.
Palmcredit lists an annual percentage rate (APR) of 24% to 36% and offers loans ranging from ₦10,000 to ₦800,000, with repayment periods of 91 to 365 days.
The amount you can borrow and the rate you receive depend on your eligibility. Use the figures in your actual offer to calculate the full cost before proceeding.
/4. Branch
Branch bases its loan offers on a borrower's profile and repayment history. Its app allows eligible users to apply for loans and review the terms before accepting.
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